Russia Has Allocated $4 Billion For Purchasing Foreign Leased Aircraft

Simple Flying

By Linnea Ahlgren

Published Mar 17, 2023

The government supports the purchase of planes as lessors take insurers to court for failing to pay up.

Photo: Vincenzo Pace

When Russia decided to start a war against its neighbor Ukraine, it also condemned domestic industries depending on Western suppliers and manufacturers to scramble to come to terms with a new, heavily sanctioned, day-to-day existence. In an unprecedented move, the Russian government gave the ok for aircraft owned by foreign lessors and registered abroad to be re-registered in the country.This maneuver set off a cascade of effects, with some aircraft being impounded while abroad and legal battles over insurance policies that are set to continue for years to come.

Purchasing planes from undisclosed lessors

Somewhat surprisingly, on December 30, 2022, state-owned flag carrier Aeroflot announced it had purchased ten Boeing 777-300ER jets, previously leased from an Irish company, which it refused to provide the name of. And that is apparently not the last of such deals planned for Russian carriers.

As reported by the state-owned Russian news agency TASS, the Minister of Transport of the Russian Federation, Vitaly Savelyev, said on Wednesday that the government has set aside more than 300 billion Rubles ($3.918 billion) for the purposes of purchasing foreign aircraft leased by Russian airlines.

In a meeting of the Committee on Transport and the Development of Transport Infrastructure in the State Duma, the minister stated,

"We are trying to buy planes from foreign lessors; this is an issue that we have looked at extensively. And the government has already allocated about 300 billion rubles. Aeroflot has already used the funds to buy 10 long-haul aircraft."

Money for new planes

The government has also allocated 237 billion rubles ($3.08 billion) for Russian carriers to take delivery of new domestically produced aircraft. The decision was taken on February 16 and will see the money drawn from the National Wealth Fund and inserted into two government-owned leasing companies—GTLK and Avia Capital Services. The largest part of the investment foresees 34 Sukhoi SSJ-NEW regional jets, 18 Irkut MC-21s and 11 Tupolev Tu-214 passenger jets going to Aeroflot.

According to the Financial Times, insurers are facing a "mega trial" in London's High Court next year, having refused to pay billions of dollars in claims from aircraft lessors. The world's largest lessor, AerCap, is taking legal action against insurance groups AIG, Lloyd’s of London, and Fidelis, seeking up to $3.6 billion in compensation for 116 stranded aircraft and engines.